STATE OF ANDHRA PRADESH Vs. KALVA SURYANARAYANA

JUDGEMENT

(1.) The short question in these Tax Revision Cases is whether the collection and supply of the Gulmohwa flower, a base used for preparation of alcohol, to the Government distilleries at Narayanguda and Kamar reddi, in terms of the contract between the Government and the assessee-respondent amounts to sale or is it merely a contract for work and labour as held by the Sales Tex Appellate Tribunal.

(2.) The assessments with respect to which this question arises relate to 1952-53 and 1953-54 in which years the assessee entered into a contract with the Excise Department of Hyderabad for the collection and supply of the Gulmohwa flower to the distilleries aforementioned, at a rate fixed in the contract varying with the grade of the flower to be supplied. According to the terms of the contract, the assessee has to collect the flower, store it in his godowns, and transport the same to the above distilleries at his expense and is to be paid for all these at a particular rate fixed in the schedule for each grade of flower supplied. If the flower is picked from the patta lands, he is bound to pay compensation to the pattedar upto the extent of one-fourth of the rate, while that picked from the Government land is apparebtly not subject to any charge. The particulars of these terms will be specified later.

(3.) For the present, however, it may be stated that the assessing authority pp( ars to have originally omitted to assess the turnover in respect of this transaction under the impression that it was not liable to sales-tax, but subsequently a notice was issued within the period fixed, viz., two years, to the respondent under rule 32 on the ground that the turnover escaped assessment. The assessing authority not only assessed the assessee on these turnovers, but also imposed a penalty for these years under section 19-B of the Hyderabad General Sales Tax Act for non-disclosure of turnover. But on appeal the Deputy Commissioner set aside the penalty on the view that the non-disclosure is not a wilful default and was due to a bona fide impression on the part of the assessee that the turnover for these years was not liable to lax. This impression was evident from the fact that for the years 1950 and 1951, the Sales Tax Officer himself had held that the turnover was not assessable. The Deputy Commissioner, however, confirmed the assessments with some modifications. Against this order, the assessee appealed to the Tribunal which after examining in detail the provisions of the contract between the respondent and the Government and in certain decisions referred to before it thought that the transaction did not contain any element of sale ; as such it held that the assessments were not valid.